Advice: Reduce Angst Buying or Selling Stocks

Someone that I know invests in stocks, and he does really well.

However, he says that the stock market tends to drive him nuts.

He told me about a time that he heard something about a sudden event on the radio, and the first thing he thought to himself was, "I wonder how this will affect the price of XYZ stock."

The second thing he thought to himself is that he's going absolutely NUTS. The event had NOTHING to do with his stock. He was just THAT consumed with his stock.

He asked for some advice on how to avoid that emotionally fueled angst he gets every time he's in the stock market.

Here is what I wrote to him...........

Is apartment investing changing? Will it affect the economy?

Lately, I've been hearing that more people (within the real estate investment world) are interested in transitioning from investing in single family homes to investing in apartments.

There are, at least, a few reasons for this.

• Apartments generate passive income.
• You only need to worry about the maintenance of one building while still collecting many rent payments.
• It's getting more difficult to find great investment deals with single family homes--since so many investors are looking for them now. Fewer people are looking for apartments; so theoretically more deals can be found with less searching effort.

However, I just read an article about apartments that might shape--not only apartment investing but also--companies in certain neighborhoods.

Here is the link to the article "No McMansions for Millennials"
http://realestate.yahoo.com/promo/no-mcmansions-for-millennials.html

It does not address investing; however, I think there are investing-oriented takeaways from this article.

Video: Warren Buffett Rocks with Geico

For my 100th post, I was trying to figure how to have some fun with it.

I came up with a few lame ideas, but none of them really hit me as "the one."

Then I ran across this video. I think I found a pretty good way to celebrate...with Warren. (He just doesn't know that he's partying with ME. :)

Anyone involved with investing certainly knows the name Warren Buffett and how good he has done with the stocks, but evidently he knows how to market himself and his companies, too.

Here is a video of Geico, a company owned by Berkshire Hathaway. Any guesses who might own THAT big company?

Fear: Investor Enemy #1

Fear plays a big role for many investors.

An investor's experience can be terrific, but it can be really bad, too.

For most people, the experience is average. Being honest, I'm guaranteed to be right about that, by definition.

However, my goal is to help people be BETTER than average investors.

One way to do this is for me to identify how many average investors think.

Investment Advice: Keep Your Composure When Your Stock Price Goes Down

There is advice about stock investing that someone gave to me...

If the company is doing the right things and you bought it at a price that made sense, the stock price will rebound, even if it drops. It just might take a while.

I take a look at examples of what I've seen since I started investing in 2008.

The Rich Just Keep Getting Richer - Makes Sense to Me!

More than once, I've heard and read the statement that the rich just keep getting richer.

EVERY TIME it is read like a complaint.

First, let's investigate to see whether that's even a true statement.

Video: Debt to Equity Swaps Explained

Even if you're not a bondholder and only buy stocks, this could affect you. So read this carefully.

While looking for something else, I stumbled across this video. (Isn't that how most of us find our BEST stuff...when we're really not looking for it?)

This video is narrated by Paddy Hirsch, which I don't know who he is truthfully, but he has a neat sounding English accent (or something similar). That just nearly guarantees us folks here in the US will assume that he's smart.

Luckily, he seems to be right on the money.

In this video (under 7 minutes), he explains how the Debt-to-Equity swaps work:

Hirsch uses an airplane to describe the order of who gets paid first in the event of a bankruptcy and how debt-to-equity swaps work.

Below, I try to explain this concept and use an example to clarify it.

Dividend Paying Stocks – Good Idea?

Different investors vary on whether you should invest in dividend paying companies.

Hint: Warren Buffet is NOT a big fan.

Ways for Companies to Handle Profits – What are dividends?

Before we decide whether investing in dividend paying stocks is a good idea, it might be a good idea to explain what dividends really are.

Investment Advice #2: Only Invest with Passion

When you have money sitting idly, it can become sort of frustrating.

Anyone who is looking to invest knows that money that is not invested is doing nothing to help you.

Of course, money that is not invested is not hurting you, either (not accounting for inflation).

Actually, it KILLS me when I have money sitting on the sideline. In fact, it kills me so much that more than once I've invested that "extra" money into something--just to keep it from sitting.

This seems to make sense--at first. I mean, how much money can you make if your money is doing NOTHING. That's right! NOTHING.

So is there ever a time that I should NOT invest?

Fear of Success: Don't let it bite you!

I think President Obama might finally get it!

Throughout the last couple of years, it seemed like every time the stock market started to make a nice rally, either he or someone from his administration would say something to kill it.

He would say something along the lines that we should not get too excited, because the economy is not healthy, yet. He wasn't wrong with his assessment, but he managed things poorly.

Great Advice: Any Investment Type

I was talking to an investor the other day, and I mentioned to him how I was struggling with a stock that jumped much high much more quickly than I planned.

Finally I sold it.

He made a good point by asking my something.

The question...Would you buy the stock (or any other investment) at today's price?

If the answer is, "No," then you probably should sell.

Even if the price rises later, you guaranteed that you got as much money from it as you felt it deserved. Asking for it to even higher yet is just being greedy, and we all know how well THAT works over time.

That's great advice...Take your profit and run. No need to be greedy.

By the way...The stock dropped to almost half of its value during the next two days.

Take My Advice—I need to begin following it, too

My last post was about paying yourself first—in money AND in action. THAT is really good advice!

However, this is often more easily said than done.

Case in point…

Types of Profit - Profit Ain't Just Profit

Remember the old Wendy's commercial in the 1980's when they were trying to make their chicken sandwiches seem better than their other fast food competitors...

When showing a picture of what seemed to be a nameless competitor, the person kept repeating..."Parts is Parts," referring to the so-called fact that all parts of the chicken are the same on a sandwich.

Wendy's; however, knew the difference (so they said). They knew that all parts of the chicken ain't the same.

People roll their eyes, but essentially many people do the same thing when it comes to profit. They'll simply ask, "What was their profit margin?"

Types of Profit

There are different types of profit that reflect different stages of the business:

Quick Analysis: BP P.L.C. (BP)

BP: BP P.L.C.

Oil drilling, refining, and transporting, and it markets and sells gasoline retail.

Recent Range: $27/share – $78/share (Current Price: 44.17, as of close of 12/31/10)
Price/Sales (P/S) = 0.46 (0.86, Industry)
Price/Book (P/B) = 1.55 (1.80)
Gross Margin = 4.3% (27.4%)
Pre-Tax Margin = -2.3% (+11.0%)
Debt/Equity Ratio = 0.45 (0.29)
Current Ratio = 1.0 (1.2)
Return on Equity = -5.3% (+14.3%)
Return on Assets = -1.9% (+7.4%)

Analysis: This company was really a great buy a couple of months ago, but I still think there is more room to grow here.

Investment Principle #1: Pay Yourself First

I open with a statement that most of us have heard--probably MANY TIMES...

Pay Yourself First

A lot of people ask me to teach them how to invest in the stock market.

The first I ask them is whether they pay themselves first.

Most people look at me like I'm crazy.

What does "paying myself first" have to do with investing?

My 16 Predictions for 2011 (and Beyond)

Happy New Year!

I know that this picture doesn't have anything to do with investing, but I think it's a cute picture. I have a soft spot for things that make me smile.

You didn't click to hear me explain my picture, you want to know my predictions (maybe not MY predictions but just predictions in general).

So without making you wait any longer, here are MY predictions for 2011 and beyond:

A New Year - Same Old Tax Tricks

As the year closes, many of us take time to reflect our thoughts. In fact, often this time of the years brings more thought than action, especially with the nostalgia of years past and the intention of our newest New Year's resolutions.

Within the stock market, however, some people are very active.

This might be true, anyway, but I'm referring to one specific thing.

TAXES.

I never have any proof, but it seems to me that the price of many stocks are mildly to strongly affected by taxes.

I see four (4) main things playing this time of year.

Bug Yourself: Take Advantage of Help You Receive

We all have been this bug, and all of us have been in a position to kill that bug sitting on the wall or the floor.

Personally, I've never liked the idea of killing anything, including bugs. (Currently, I'm not a vegetarian, which makes me a HUGE hypocrite, but that is a topic for another area.) So I decided to save this bug.

Accepting Help

When we're in trouble, most of us wish we could just get a little break. Might I even use the word, "help?"

Many people expect help, and these people are not the target of my post, but most of us wish that we could have some help, and, of course, we'd take advantage of it if we got it. Right?

Gold is Not a Golden Investment

That's right. Gold is NOT the golden investment that many people assume it be.

I am not saying that gold will not go up. Then again, I am not saying that gold will not go down, either.

In fact, I am making absolutely NO predictions about the future price of gold.

Why do some people place more value in gold than money, specifically the US Dollar?

Management: In 30 Years who will be King, Wal-Mart or McDonald's?

Who will be tomorrow's king?

30 years from now, will Wal-Mart still rule the bargain retail industry? McDonald's the fast food industry?

I say that only one (1) of them will: McDonald's. The answer lays in the corporate layout of their management..and the way they grow.